CoreLogic’s daily dwelling values index has now declined 6.3% from peak at the 5-city aggregate level, with all three major capital city markets recording significant falls in response to the Reserve Bank of Australia’s (RBA) aggressive interest rate tightening:
‘Big Three’ lead Australia’s house price decline.
Sydney continues to lead the way, with values down 9.8% from their peak, whereas Melbourne’s are down 6.2% and Brisbane’s are 5.7% lower.
The ‘good’ news is that the rate of decline has stabilised at the 5-city aggregate level, with quarterly losses tracking at 4.4%. This is roughly the same pace of decline as a month ago:
Pace of decline stabilises.
Sydney’s quarterly rate of decline has moderated to 5.9% from 6.3% a month ago, whereas Melbourne’s quarterly decline has moderated from 3.9% a month ago to 3.6% currently.
After joining the correction later, Brisbane’s quarterly decline is still accelerating, running at 5.3% currently.
As illustrated in the next chart (in black), the 6.3% 5-city aggregate decline over just six months is easily the fastest price correction on record:
Fastest housing correction on record.
However, the current correction has some way to go before it matches the record 10.7% peak-to-trough decline recorded over 21 months between 2017 and 2019.
It is important to note that there is a two-to-three month lag between the RBA’s rate hikes and their impacts on mortgage holders and borrowing capacity. This means that a significant portion of the RBA’s rate increases have yet to be passed on to borrowers.
The RBA’s latest monetary policy statement mentioned that “the Board expects to increase interest rates further over the period ahead”, suggesting a few more 0.25% rate hikes.
In turn, Australian house prices will continue to fall for the foreseeable future, although the pace of decline should moderate.
